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Digital technologies increase momentum

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While it might be doing so cautiously, the steel industry is slowly embracing Industry 4.0, which has been described as the newest industrial revolution, driven by data, data analytics and digitalization.

The steel industry has already been automated and collecting data via sensors for many years.

Digitalization technologies and automation have also been part of the steel industry for a long time.

Franck Adjogble, chief engineer for process control and production planning systems at SMS Group Inc, agrees that many of the technologies supporting Industry 4.0 are not new. For example, algorithms for machine learning, which enhance the ability to understand data patterns and to use those patterns in the decision-making process, have been around for several years. But now it is easier to collect more data than was possible in the past and to analyze and correlate that data in a way ion which it is easier to understand what is going on in the steel plant. You can even create an active, digital version of the coil which could contribute to decision-making efforts, he notes.

What is new is a change in the mindset, including that by the steel industry, concerning Industry 4.0 concepts. I think that more and more steel producers are becoming aware that the data they are collecting at their plants is a very valuable asset that they could use to improve their production processes, Kurt Herzog, head of Industry 4.0 for Primetals Technologies says.

Antonio Catalano, head of digital transformation process for Tenova Metals, agrees. He explains that given that Industry 4.0 lets companies use data in a more effective, more mobile way, it could be very valuable to the steel industry. Steel plants are very complex facilities where people in the different sections of the plant dont necessarily talk with each other.

But while the steel industry is now starting to implement Industry 4.0 concepts, it is doing so in very small steps, Adjogble says, with those steps largely being driven by the market itself. He explains that steelmakers are constantly being required to produce higher quality products with shorter lead times. Also, the supply chain is changing. Producers need to use these digital technologies to ensure that they can survive in this market.

There continues to be a perception that the steel sector might have been slower to move toward Industry 4.0 than some other industries. But while he says that might be the case, Simon Riley, leader of the performance manufacturing and distribution practice of Crowe Horwath LLP, says he does not believe that is because it has a fear of technology, but rather because it is very much a relationship-based industry  one that is much more of a business-to-business (B2B) market while it is more the business-to-consumer companies that have been at the leading edge of this technology revolution. Given their deep relationships with their customers, steel and other metals companies tend to be nervous about their current voice-to-voice communications with customers being replaced with technology, Riley explains.

Still, Herzog says that he believes that steel companies have been less likely to pursue typical Internet of Things (IoT) activities. That is partly because a lot of IoT platforms are still not very mature, but mainly because steelmakers are reluctant to share data or to let data leave their premises, he explains.

There has been some progress in these areas. For example, Tenova is partnering with Microsoft to set up an IoT-related architecture platform that will allow communication not only between the different pieces of equipment in the plant, but also between people inside and outside of the plant. Catalano says that in the future this platform will not only give workers and managers throughout the plant the information that they need through an electronic dashboard, but it will enable Tenova to support its customers remotely.

Catalano says that perhaps the hardest part about the acceptance of Industry 4.0 is not the technology, but the need for companies to engage day by day with its material and technology suppliers and its end-use customers in a stronger, collaborative way.

A big concern is the security of data, including how much data a company wants to expose to the external world or how much they want to keep inside, Stefan Koch, Global Lead for Metals, Industry Business Unit Mill Products, SAP, points out. Steve Pillsbury, digital operations leader for Pricewaterhouse Coopers (PwC), agrees, noting that while he does not view it as a major roadblock at this time, these security issues could slow down the rate at which the industry adopts Industry 4.0. But that slowing is not necessarily a bad thing as it means that companies are asking the right questions, he says. Cyber risk, while real, is adjustable.

Nevertheless, there could be a big benefit if steel producers did share some of their data with their customers, suppliers and the companies that build their plants and equipment, Herzog says. But even though secure data sharing methodologies are available, many steelmakers are still worried about the risk and arent willing to take the chance, he adds. They need to be assured that there is a clear benefit to sharing data and they will be able to do so in a secure way, he explains.

According to Crowe Horwaths Riley, the level of fear about security issues has actually eased somewhat in the past year or two, helped along by a higher level of comfort with the use of Cloud computing. In what he describes as a 180-degree change, Riley says that a recent survey indicates that the industry is now more comfortable using Cloud computer than on-premise software solutions. In fact, he says that many companies already have their entire core system on the Cloud, including their production systems.

Primetals Herzog says that the steel industry is currently at a point where most producers know that they need to do something to incorporate Industry 4.0 into their operations, but many do not know which way to go or what they need to do first.

There isnt just one clear path to Industry 4.0, observes Andrea Nardone, chief operations officer for Danieli Automation SpA. There is, however, a general progression that companies go through, PwCs Pillsbury says, with the initial awareness of the Industry 4.0 concepts and then a brief period of paralysis when the company finds the necessary transformations somewhat overwhelming. That period is followed by an experimentation and testing phase, a proof-of-concept adoption phase, and then ultimately an integration phase in which the company actually updates its legacy system with new capabilities, innovations and business processes. This, he says, is with the aim for steelmakers to maximize advantage through using data to both create a perfect plan and to execute it perfectly  or at least as perfectly as possible.

PwC has forecast that through a drive to increase productivity gains through automation, wireless technologies, data and analytics, the metals sector could see a 3.2% reduction in costs  approximately $56 billion  from 2015 through 2020.

Progress madeWhile the ultimate goal is to make steel mills fully learning factories  facilities that could automatically correct things are not going well and to learn how to prevent similar problems in the future  SMS groups Adjogble says that the industry will continue to move towards that goal in very small steps.

A number of those steps have already begun to be made. SAPs Koch notes that as opposed to just using programmable logic controllers in certain areas of their plants, now companies are going beyond that, utilizing more sensors, including smart sensors, and trying to connect different sources of data and different inputs to a business process in a more sophisticated manner than in the past.

Now they have a big data repository and need to analyze that data to provide solutions to improve certain process steps, Koch explains. I wouldnt say that everyone is reinventing their whole business and business processes, but they are driving forward.

What most steel companies are currently doing is to look where they could find some quick wins, Andrew Zoryk, managing director in Accentures metals practice, points out. This includes finding out what the easy potential areas are where they could leverage such things as artificial intelligence, machine learning and modeling to actually drive extra value.

He notes that they are doing many proof-of-concept and pilot projects within their plants, looking at such things as how they can utilize data better, how they could reinvent some of their business processes and how they could rethink the ways they collaborate between humans and machines using the data that they have.

At present, there is a big gap between the Industry 4.0 technologies that are available and those that are implemented and, despite increased interest from the steel industry, some think that gap could continue to get wider with technology development growing faster than the steel industrys implementation.

Very few companies, especially metals companies, have been able to bring all of the Industry 4.0 concepts together in one single approach. Zoryk says that, according to Accentures research, only about 5% percent of metals companies have been able to achieve this so far, compared with about 10% of all industrial companies.

Still, I dont know of any major steel company that isnt at least dabbling in this area with some bigger name companies making some major investments, Zoryk says. They are waking up to the fact that they need to do something to be more digital so that they can be more competitive. But the challenge for many companies is how to do this effectively, in a holistic way.

While each company is approaching Industry 4.0 differently, Herzog says it is widely recognized that digitalization is not a project, but rather a journey that must be taken step by step.

The Industry 4.0 revolution actually has the ability to be implemented in an easier fashion than the previous industrial revolution  the automation revolution  which required major upgrading of steel plants infrastructure, Carlo Travaglini, director of technology at Gerdau Long Steel America, maintains. Now it is more about what kind of technologies make sense and that we can apply to our operations.

Implementation and integration of those technologies, especially into existing operations could, however, be challenging. Given that mechanical production equipment can last as long as 50 to 60 years and many automation systems at steel plants are 15-25 years old, it can be difficult to integrate Industry 4.0 technologies into existing operations, especially without the necessary technical interfaces. The fact that there are no unified semantic standards in the steel industry to allow data to be interpreted makes it even more challenging.

Probably the most common thing that steel companies are looking at now is predictive maintenance, according to Danielis Nardone. He says this is because steelmakers believe that it could give them a more tangible return on investment.

Catalano says that through the use of the data they are collecting from their plants sensors, companies are able to know when to do maintenance even before equipment breaks down, which is more efficient than having to shut down when there is a problem.

In addition, Catalano says that machine learning and artificial intelligence will give the steel industry great benefits, although it wont do so immediately. First, data needs to be collected and stored properly. That data then needs to be structured properly to enable it to be used for decision-making purposes.

There is still some reluctance in the steel industry when it comes to artificial intelligence and machine learning, Herzog says, explaining that while they are willing to use such data analytics and machine learning to help them to better understand their production processes, steel companies want it to be them, not the machine, that decide what needs to be done to make the necessary corrections. They are reluctant to have that done on an artificial intelligence basis. Nardone says that part of this resistance is because of a need for the industry to have a better understanding of what artificial intelligence is and what its benefits could be.

PwCs Pillsbury describes artificial intelligence as a way to allow machines, through data analytics, to learn the same things that an experienced worker or supervisor knows, plus perhaps a little more, which could be very beneficial. This is not just because of the potential loss of knowhow when workers retire or move to other companies, but as steelmaking becomes more complex it becomes increasingly important for the company to have a better understanding of all the factors that go into making steel, which Pillsbury says is probably total more than a human can process.

People wont be replaced by machines, but these technologies will rather to be used to support people in the decision-making process, Catalano says. He also notes that robots can replace people to guarantee the highest level of safety in the plant by keeping people away from potentially dangerous tapping operations. Thanks to these technologies, workers will be able to collaborate with the robots from safe zones.

Pillsbury agrees, although he envisages that it is possible that sometime in the future the equipment will begin to automatically make certain decisions, freeing up workers to engage in other tasks. There will always be a role for humans in the steel mill, it just might not look like todays role, he says. In the future, people in the metals industry will be spending more of their time engaging in such activities as determining how to be a better supplier or better customer and how to optimize their operations.

There is no doubt that Industry 4.0 will continue to be more and more accepted by the steel industry given its potential benefits, SMS Adjogble says. It isnt hype. It isnt just a new technology. It will have a big impact on how steel companies can be managed in the future to ensure that they are profitable and competitive.

SAPs Koch says that the tricky part will be to get everyone to understand what is behind Industry 4.0 and how it could be used to establish a better connected supply chain. Already we are seeing more capabilities to use data to track and trace products and to harmonize companies processes, he says. And over time there should be more sophisticated collaboration with the different parties in the supply chain. There has already been some movement in this direction and there will likely be more in the not that distant future.

That said, Catalano says that steelmakers will only embrace Industry 4.0 if they are given valuable insights and if they get valuable results, including lower production cost, improved flexibility and the ability to be more competitive. He is optimistic that they could achieve such benefits.

Written By Myra Pinkham

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